Ct State Student Loan Advice for College Students & Families

/Home/Student Loan Information by State/Connecticut Student Loans

Board of Governors for Higher Education
Department of Higher Education
State of Connecticut

Student Loan Advice for College Students & Families

Recent news accounts are warning college students and
their parents about the difficulties they may face in
finding school loans for the coming year. While any
loan requires careful consideration, the latest concerns
about the availability of student loans in light of the
current credit crunch are generally overstated.

The term “student loan” refers to three distinct types of
loans:
1. Federally-backed student loans which are
provided through the Federal Family
Education Loan Program (FFELP) and Direct
Lending Program (DL). Both these federal
programs provide federal Stafford Loans,
PLUS Loans, Graduate PLUS Loans and
Consolidation Loans.
2. State-sponsored student loans which are not
backed by the federal government. In
Connecticut, these are provided by the
Connecticut Higher Education Supplemental
Loan Authority (CHESLA).
3. Alternative or private loan programs which
are not backed by either the federal or state
government and are funded by private lending
institutions.

Loan Availability
FFELP/DL - Although there have been a handful of
FFELP lenders who have withdrawn or curtailed their
participation in the program, students and families
should have no difficulty finding lenders who are full
participants this coming year. Check with your school
to find out about FFELP lenders.
Similarly, students enrolled in schools which
participate in DL should have no problems obtaining
federal loans. For a list of schools participating in the
DL program, go to:
http://www.directstudentloancoalition.org/clientimage
s/40234/dlschoolsbystate.xls

State Loan Programs – Some states have announced
that they are discontinuing their loan programs. This is
not the case in Connecticut. CHESLA is ready to meet
the needs of eligible applicants for the coming year.
For more information go to www.chesla.org

Private/Alternative Student Loans – This is the
category of loans which merits most caution by
students and their families.
Because these loans are not backed by the federal or
state governments, the entire risk of making these loans
rests with the provider. These lenders generally have
stricter underwriting and approval requirements on
these loans and those restrictions may have been
tightened in light of the current credit crunch situation.
Borrowers with weak credit histories very well may
find themselves being denied the loan, even though
they may have been approved in previous years. Also,
keep in mind that these loans tend to be the most costly
of the various loan types. Students and families should
first consider federal loans and state loans before
opting for a private loan. Check with your school for
sources of private student loans.

What to Do?
The first and best step is to contact your school and
speak with the financial aid office about the actions it
has taken to ensure access to student loan money.
Remember, you should have little cause for concern if
you are accessing a federal student loan.
If you intend to borrow a private student loan,
however, you should check with the lender to see what
the terms of the loan are and if you can be prequalified.
By getting pre-qualified you’ll have peaceof-
mind entering school. If you are denied, you should
immediately talk to your financial aid office to see
what other options are available for financing your
education.

Mark French
Associate Director for Student Financial Aid